Geopolitical tensions drag PSX lower amid US-Iran deadlock, Hormuz uncertainty

The Pakistan Stock Exchange (PSX) remained under pressure on Monday as investor sentiment weakened amid stalled US-Iran talks, continued disruption in the Strait of Hormuz.

According to the PSX website, the market opened on a bearish note, with the benchmark KSE-100 Index falling to an intraday low of 169,268.33, down over 1,400 points shortly after the opening. As trading progressed, the index moved within a range of 169,268.33 to a high of 171,306.61.

At close, the market settled at 169,497.35, down 1,174.69 points or 0.69% from the previous close.

Selling was observed across major sectors, including automobile assemblers, cement, commercial banks, fertiliser, oil and gas exploration companies and oil marketing companies, indicating broad-based weakness. Index-heavy stocks such as HUBCO, OGDC, PPL, PSO, MCB, MEBL and UBL traded in negative territory, exerting pressure on the index.

Market participants remained cautious as negotiations between the United States and Iran showed limited progress despite Pakistan’s role as a mediator, adding uncertainty around regional stability and energy flows. The ongoing blockade and tensions in the Strait of Hormuz, a key global energy corridor, have raised concerns over supply disruptions and higher global oil prices.

AKD Research said in its weekly market review that a constructive resolution of the Middle East conflict will remain the pivotal near-term catalyst for the direction of Pakistan’s equity market.

The State Bank raised the policy rate by 100 bps to 11.50%.

Monday's downturn also follows losses in the previous week, when the KSE-100 Index declined by 3,266.98 points, or 1.9 per cent week-on-week, to close at 170,672.04.

Last week’s performance was also influenced by geopolitical uncertainty, rising global oil prices, IMF-linked policy concerns and domestic energy supply issues, factors that continue to shape investor sentiment.

Globally, Oil ​climbed on Monday as stalled US-Iran peace talks pointed to further disruption in Middle East energy exports, while global stocks held steady at the start ‌of a busy week of tech earnings reports and central bank decisions.

Benchmark Brent crude futures rose almost 3% to touch a more than three-week high of $108.5 a barrel at one point in the session, stoking inflation worries and prompting traders to all but price out rate cuts in developed markets this year.

MSCI's All-World index was a touch higher, while Europe's STOXX 600 dipped ​around 0.2%. In Asia, markets in Tokyo and Seoul rose to trade around record highs, riding a fresh wave of AI-fuelled optimism, while ​Wall Street futures fell.

In currencies, the dollar was broadly steady on Monday, with the euro at $1.1746 and the Japanese yen pinned just below the crucial 160 level.